H1-2018 RESULTS PRESENTATION TO FINANCIAL ANALYSTS JULY 25 TH , 2018 - - PowerPoint PPT Presentation
H1-2018 RESULTS PRESENTATION TO FINANCIAL ANALYSTS JULY 25 TH , 2018 H1-2018 Results: Net income at 62.8m; RoATE stands at 7.8% 1 2 3 4 5 H1-2018 H1-2018 CAPITAL KEY TAKE AWAYS APPENDICES HIGHLIGHTS RESULTS MANAGEMENT &
PRESENTATION TO FINANCIAL ANALYSTS JULY 25TH, 2018
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H1-2018 HIGHLIGHTS
H1-2018 RESULTS
CAPITAL MANAGEMENT
KEY TAKE AWAYS & OUTLOOK
APPENDICES
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
Turnover reached €685m y-t-d, up 2.1% at constant FX and perimeter; Q2-2018 up 2.1% y-o-y
− Trade Credit Insurance growing again in mature markets and emerging markets recovering progressively − Client retention at record level and insured turnover continuing to grow
H1-2018 net loss ratio down by (15.1) ppts. at 43.2%; Net combined ratio at 77.0%
− Loss experience progressively normalising, both on frequency and average size of claims − Favourable past claims management and recoveries continue − Net cost ratio at 33.8% vs. 34.0%* in H1-2017; driven by strict cost control and higher reinsurance commissions − Business investments fully funded by cost savings
Net income (group share) at €62.8 m, of which €27.3m in Q2-2018; annualised RoATE at 7.8% Estimated Solvency ratio at 163%1, above the target range (140% - 160%) − Partial internal model progressing while monitoring standard formula regulation evolution − Share buyback program under way with €16.5m purchased at end of June (1.7m shares) Fit to Win achievements:
− Achieved €18m y-t-d (€13m additional cost savings vs. H1-2017), €30m 2018 annualised target likely to be slightly exceeded − Continuing disciplined investment of €15m (€11m additional) into growth, risk management, compliance and process transformation
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* Adjusted for €6m Italy one-off. Reported number for H1-2017 was 35.5% 1 The estimated Solvency ratio disclosed in this presentation is a preliminary calculation based on Coface’s interpretation of Solvency II. The final calculation could result in a different Solvency ratio. The estimated Solvency ratio is not audited.
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
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CEO
Finance & Risk* Corporate Secretary* Internal Audit Business Technology* CEO
CEO W.Europe* CEO
CEO LatAm* CEO APac* CEO
CEO MedAf* : new / renovated dpts.
IT services Infrastructure & Operations Business Domains
Underwriting* : new recruitments
Business Technology, Transformation and Innovation
: Group Management Board *Member of the Group Executive Committee Commercial
Strategy & Business Dev.*
Financial Institutions Economic research Partnerships Strategic planning & PMO Marketing & Innovation International
Transformation Office*
► Technology at the heart of our cultural transformation:
− Reorganised IT and Operations departments into realigned Business Technology (BT) unit
► Created Transformation Office to accelerate business transformation; running more than 20 lean projects ► Created an Innovation department to accelerate digital agility : hackathons, process innovation… ► Upgrading leadership to drive our strategic agenda
− Training for 300 managers
► Maintaining tight focus on risks in a normalising risk environment
− Overall economy grows at steady pace − Closely monitoring new risks (protectionism, populism, trade wars…)
Lean & Process Project & Change mgmt.. Architecture H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
2.1% (1.0)% Gross Earned Premiums (GEP) Insurance related fees Other revenue In €m Fees / GEP ratio 7
Total revenue up 2.1% vs. H1-2017 at constant FX
► Trade credit insurance* growing at 2.6% at constant FX ► Growth driven by client activity (better volume effect)
and record high retention rate
► Economic environment continues to drive pricing pressure ► Other revenue (Factoring and Services) down by (2.1)%
► Fees / GEP stable
V% V% ex. FX
56 54 71 70 566 561 692 685
H1-2017 H1-2018 12.5% 12.5% H1-2017 H1-2018 H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
* Including Bonding and Single Risk
42 34
H1-17 H1-18
51 46
H1-17 H1-18
63 58
H1-17 H1-18
175 185
H1-17 H1-18
63 67
H1-17 H1-18
155 152
H1-17 H1-18
142 143
H1-17 H1-18
Northern Europe Central Europe Mediterranean & Africa North America
Total revenue by region, in €m
Asia Pacific Latin America
Record retention and growing client activity Good commercial momentum and higher retention Insurance revenues growing with record retention and higher activity Stabilised portfolio; Higher revenues driven by large deals Growing new business and client activity
lower Single Risks Remaining prudent on risk although improving Q1 performance Stable insurance revenues; Lower factoring
V% V% ex. FX
8 (1.8)% (1.8)% 7.8% 6.9% 7.3% 5.8% (8.1)%
Western Europe
1.5% 0.5% 1.7% (10.4)% (1.5)% (20.3)% (6.5)% H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
New production1 Retention rate1 Price effect 1 Volume effect 1
Record/high retention across all regions Controlled price decrease reflecting good loss experience Client activity remains high in all markets confirming previous quarters trends Performance improving from Q1-2018 but remaining prudent in highly competitive environment
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1 Portfolio as of June 30th 2018; and at constant FX and perimeter. New production: in €m
83 82 74 62
H1-15 H1-16 H1-17 H1-18
88.2% 89.2% 90.2% 93.0%
H1-15 H1-16 H1-17 H1-18
(2.9)% (2.1)% (1.6)% (1.7)%
H1-15 H1-16 H1-17 H1-18
1.1% 0.0% 2.5% 3.4%
H1-15 H1-16 H1-17 H1-18 H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
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Loss ratio before reinsurance and including claims handling expenses, in %
► Claims activity progressively normalising,
both in terms of number and average size
► Gross loss ratio includes 1.5% gain from
recoveries on highly reinsured FAC business
Loss ratio before reinsurance and excluding claims handling expenses, in %
► No change in reserving policy ► Prior years boni well above
historical average
72.5 45.3 70.2 48.8 70.0 61.0 71.9 53.7 74.1 49.0 71.8 39.7 (27.2) (21.4) (9.0) (18.2) (25.1) (32.1) All underwriting years Prior underwriting years
56.0 42.4
H1-2017 H1-2018
57.8 54.2 43.0 50.3 39.7 45.0
Q1-17 Q2-17 Q3-17 Q4-17* Q1-18* Q2-18*
* Impact of facultative business (highly reinsured): +9.7 ppts. +0.7 ppts.
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
Loss ratio before reinsurance, including claims handling expenses – in %
Group
* % of Total revenue by region
North America Asia Pacific Latin America
8%* 7%* 5%*
Central Europe Western Europe Northern Europe Mediterranean & Africa
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27%* 22%* 21%* 8%* 51.0 63.3 51.4 42.4
FY-15 FY-16 FY-17 H1-18
56.3 85.0 49.0 12.2
FY-15 FY-16 FY-17 H1-18
100.6 146.8 53.8 2.1
FY-15 FY-16 FY-17 H1-18
113.4 60.2 35.9 56.3
FY-15 FY-16 FY-17 H1-18
57.4 50.3 49.6 52.3
FY-15 FY-16 FY-17 H1-18
33.2 38.5 54.0 34.7
FY-15 FY-16 FY-17 H1-18
39.8 58.5 57.2 54.2
FY-15 FY-16 FY-17 H1-18
32.6 49.8 48.4 53.9
FY-15 FY-16 FY-17 H1-18 H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
External acquisition costs (commissions) Internal costs In €m (0.9)% (3.9)%
► Achieved €18m y-t-d (€13m additional cost savings
now likely to be slightly exceeded
► Invested €15m (€11m additional) into growth, risk
management, compliance and process transformation
► Cost base impacted by 2.9% inflation ► Q2-2018 gross cost ratio at 35.7%
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Cost ratio before reinsurance, in %
V% V% ex. FX
131 139 128 127 131 131 41 37 39 40 40 38 172 176 167 168 171 169
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
34.7 38.0 37.4 35.7 34.8 35.7
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
270 (8) (13) 11 8 (6) 262 H1-2017 FX Costs savings Investments Inflation One off costs H1-2018
(0.5)%* 2.7%*
*
* €6.0m Italy one-off
35.6 *
* ex. €6.0m Italy one-off * €6.0m Italy one-off *
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
► Higher premium cession rate (underwriting years
2017 and 2018) materialising in accounting numbers (+2.4 ppts. in Q1-18)
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H1-17 H1-18 V% Underwriting income before reinsurance 38.8 122.2 +215% Underwriting income after reinsurance 21.5 88.3 +310% Reinsurance result N.S. (17.2) (33.9)
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
H1-17 H1-18 Gross earned premiums 565.6 560.7 Net earned premiums 415.5 398.7 Gross claims expenses 316.8 237.5 Net claims expenses 242.1 172.3 Premium cession rate Claims cession rate
26.5% 28.9% 23.6% 27.5%
►
Net combined ratio improved to 77.0% (vs. 93.7% in H1-17)
►
Investments fully financed by cost savings
►
YTD net combined ratio down by (16.7) ppts. mainly driven by lower losses and improved reinsurance commissions
►
After reaching a peak of the cycle in Q1-2018, loss ratio progressively normalising
Net cost ratio Net loss ratio Net combined ratio (16.7) ppts. In % 14
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Net cost ratio Net loss ratio Net combined ratio In %
58.3 43.2 35.5 33.8
93.7 77.0
H1-2017 H1-2018 58.2 58.4 46.3 41.8 39.8 46.6 33.9 37.1 35.4 34.6 32.7 35.0
92.0 95.4 81.7 76.4 72.5 81.5
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
(13.9) ppts. H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
1 Excludes investments in non-consolidated subsidiaries 2 Excludes investments in non-consolidated subsidiaries, FX and investment management costs
Stable accounting yield even if the investment yield is lower
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Total € 2.73bn1
€m H1-17 H1-18
Income from investment portfolio without gains on sales 2 20.7 21.3 Gains on sales 8.6 3.8 Investment management costs (2.2) (2.1) FX effect (2.2) (8.3) Other 0.9 (1.7) Net investment income Accounting yield
1.1% 0.9% Accounting yield
0.8% 0.8% 25.8 12.9
Keeping a diversified strategy
Bonds 64% Loans, Deposit &
20% Equities 8% Investment Real Estate 8%
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
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► Robust operating performance in H1-2018 ► Limited restructuring charges ► HQ lease renegotiation more than offsets Cofacrédit ► Operating income doubled at €100.4m ► Tax rate keeps improving to 32%
Income statement items - in €m
H1-17 H1-18 Current operating income 47.4 101.2 Fit to Win investments & restructuring expenses (0.8) (3.5) Other operating income and expenses (0.2) 2.7 Operating income 46.5 100.4
Finance costs (8.9) (9.4) Share in net income of associates 1.1 0.6
Income tax (18.4) (28.8)
Tax rate 49% 32% Non-controlling interests (0.0) 0.0
Net income (group share) 20.2 62.8
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
Change in equity
in €m
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Return on average tangible equity (RoATE)1
1 Annualised RoATE
1,791.0 (52.9) (19.7) 1,802.6 62.8 (1.8)
IFRS Equity attributable to owners
Dec 31, 2017 Distribution to shareholders Net income impact Revaluatuion reserve (financial instruments AFS) Treasury shares, currency translation differences & others IFRS Equity attributable to owners
June 30, 2018
5.3% 7.8% 3.4% (1.3)% 0.4%
RoATE 31.12.17 Technical result Financial result Tax and others RoATE 30.06.18
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
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H1-2018 simplified balance sheet
€m Factoring assets Factoring liabilities Gross insurance reserves Insurance investments Goodwill & intangible assets Other liabilities Shareholders’ equity Other assets Financing liabilities
(including hybrid debt)
►IFRS 9 “Financial instruments”
− Coface meets criteria to apply temporary exemption of IFRS 9 for its insurance business, until 1 Jan 2021 − IFRS 9 implemented for factoring entities (in Germany & Poland) as of 1 Jan 2018, with a limited impact of €(0.7)m on the factoring receivables
►IFRS 16 “Lease contracts”
− Detailed assessment of the potential impact on its way − COFACE expects the impact on equity to be immaterial; the most significant impact identified is related to the recognition of new assets and liabilities for new office leases
►IFRS 17 “Insurance contracts”
− Implementation roadmap, financial impact assessment and recommendation for IT tool progressing as planned
►Financial strength affirmed − Fitch: AA-, stable outlook
rating affirmed on November 9th, 2017
− Moody’s: A2, stable outlook
credit opinion updated June 8th, 2018
2,621 1,685 2,853 220
7,377
Assets
2,626 869 1,711 381
1,791 7,377
Liabilities H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
159% 159% 158% 163%
+100 bps Spread +100 bps Interest rates 30/06/2018 SCR cover (Std)
146% 126%
1/20 crisis equivalent 2008 crisis equivalent
120% 160% 140%
H1-2018 163%1
H1-2018 estimated Solvency ratio in target range
►
Estimated Solvency above the upper range of the comfort scale (140% - 160%)
►
Insurance SCR stable
►
Higher factoring required capital mainly due to higher regulatory minimum ratio (9.875% vs. 9.25%)
20 1 End-2017 final solvency ratio stands at 169% (based on the interpretation by Coface of Solvency II ). The ratio presented above of 164% is based on a stricter estimation for Factoring SCR to anticipate regulatory changes. Not audited 2 The estimated Solvency ratio disclosed in this presentation is a preliminary calculation based on the interpretation by Coface of Solvency II ; final calculation could result in a different Solvency ratio. The estimated Solvency ratio is not audited.
Low sensitivity to market shocks
market sensitivity tested through instantenous shocks
Solvency requirement respected in crisis scenarios
Coface comfort scale 1 +100 bps on credit and +50 bps for OECD government debt 2 Based on the level of loss ratio observed during 2008 crisis 3 Based on the level of loss ratio corresponding to 95% quantile 4 Contingent Equity Line impact
131% est. CEL impact
4 2
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
1 2 3
164% 163%
(0.0) ppts. (0.9) ppts. (0.5) ppts.
31/12/2017 Insurance SCR variation Factoring SCR variation Own funds variation 30/06/2018
1
►Total solvency ratio computed by comparing the sum of SCR and Factoring required capital to the total available own funds eligible under Solvency II ►SCR calculation
1 year time horizon; measures maximum losses in own funds with a 99.5% confidence level; Standard Formula based on unified parameters (standard deviation, correlations, etc.)
►Factoring required capital
9.875% x RWA (RWA computed based on standard methodology)
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Standard model
Non-life underwriting risk
reserves)
Market risk
Counterparty risk
Operational risk
€m
Tier 3 Tier 2 Tier 1
1,338
1 The estimated Solvency ratio disclosed in this presentation is a preliminary calculation based on Coface’s interpretation of Solvency II ; final calculation could result in a different Solvency ratio. The estimated Solvency ratio is not audited.
1,016 1,270 2,067
907 (224) (98) 1 016 254 1 016 1 624 273 254 409 124 34 34
SCR components before diversification and tax adjustments Diversification Tax adjustments Total SCR as of 30.06.2018 Factoring required capital as of 30.06.2018 Total required capital as of 30.06.2018 Eligible own funds
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
H1-2018 operating income doubled at €100.4m
− Strong operating performance in a progressively normalising environment where risks (protectionism, populism…) are on the rise − Trade credit insurance1 growing at 2.6% − Net combined ratio at 77.0% driven by a low net loss ratio of 43.2% − Net income (group share) at €62.8 m ; RoATE stands at 7.8%
Strong estimated solvency ratio at 163%2, above the comfort range
− Carefully monitoring standard formula development − Partial Internal Model project is progressing as expected
2018 full-year outlook
− Economy remains strong but cycle of declining insolvencies has bottomed out in developed economies − Deep Fit to Win transformation continues while carefully monitoring rising risks − H2-2018 loss levels expected to revert to middle-of-cycle range
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1 Including Bonding and Single Risk 2 The estimated Solvency ratio disclosed in this presentation is a preliminary calculation based on Coface’s interpretation of Solvency II. The final calculation could result in a different Solvency ratio. The estimated Solvency ratio is not audited.
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
Quarterly and cumulated figures
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DOWNLOAD OUR .XLS FINANCIAL SUPPLEMENT WWW.COFACE.COM/INVESTORS/FINANCIAL-RESULTS-AND-REPORTS Income statements items in €m - quarterly figures Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 % % ex. FX Gross earned premiums 282.2 283.4 271.6 272.5 278.4 282.3 (0.4)% +2.8% Services revenue 66.1 60.0 57.9 61.2 65.6 58.7 (2.3)% (1.1)% REVENUE 348.3 343.4 329.4 333.7 344.0 340.9 (0.7)% +2.1% UNDERWRITING INCOME(LOSS) AFTER REINSURANCE 14.5 7.0 34.2 44.0 52.4 35.9 x5.1 x5.0 Investment income, net of management expenses 5.6 20.2 18.9 10.6 8.3 4.6 (77)% (60.8)% CURRENT OPERATING INCOME 20.1 27.3 53.1 54.6 60.7 40.5 x1.5 x1.6 Other operating income / expenses (1.0) 0.0 (1.3) 1.7 (2.3) 1.5 x40.3 x39.9 OPERATING INCOME 19.2 27.3 51.7 56.3 58.4 42.0 x1.5 x1.6 NET INCOME 7.3 12.9 34.8 28.2 35.5 27.3 x2.1 x2.3
Income tax rate 52.0% 47.1% 27.3% 47.2% 35.3% 26.4% (20.7) pts
Income statements items in €m - cumulated figures Q1-2017 H1-2017 9M-2017 FY-2017 Q1-2018 H1-2018 % % ex. FX Gross earned premiums 282.2 565.6 837.2 1,109.7 278.4 560.7 (0.9)% +2.6% Services revenue 66.1 126.2 184.0 245.2 65.6 124.3 (1.5)% (0.2)% REVENUE 348.3 691.7 1,021.2 1,354.9 344.0 685.0 (1.0)% +2.1% UNDERWRITING INCOME(LOSS) AFTER REINSURANCE 14.5 21.5 55.8 99.8 52.4 88.3 x4.1 x4.1 Investment income, net of management expenses 5.6 25.9 44.7 55.3 8.3 12.9 (50)% (34.5)% CURRENT OPERATING INCOME 20.1 47.4 100.5 155.0 60.7 101.2 x2.1 x2.2 Other operating income / expenses (1.0) (0.9) (2.3) (0.6) (2.3) (0.8) x0.9 x1.1 OPERATING INCOME 19.2 46.5 98.2 154.4 58.4 100.4 x2.2 x2.3 NET INCOME 7.3 20.2 55.0 83.2 35.5 62.8 x3.1 x3.3
Income tax rate 52.0% 49.0% 36.9% 40.8% 35.3% 31.7% (17.4) pts H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
Revenue by region
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Total revenue - by quarter - in €m Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Northern Europe 79.8 75.1 74.7 74.2 79.0 73.2 Western Europe 73.1 69.3 68.5 69.8 74.8 68.4 Central Europe 31.9 30.9 31.0 34.0 33.6 33.5 Mediterranean & Africa 86.8 87.7 85.1 88.5 91.8 92.7 North America 32.2 31.1 29.2 29.4 27.4 30.7 Latin America 21.1 21.4 17.2 16.1 16.2 17.7 Asia Pacific 23.4 27.8 23.8 21.8 21.3 24.6 Total revenue 348.3 343.4 329.4 333.7 344.0 340.9 +2.1% V% ex. FX (2.6)% (0.7)% +10.5% +7.5% +5.8% (2.3)% (5.0)% Total revenue - cumulated - in €m Q1-2017 H1-2017 9M-2017 FY-2017 Q1-2018 H1-2018 Northern Europe 79.8 155.0 229.7 303.9 79.0 152.2 Western Europe 73.1 142.5 211.0 280.8 74.8 143.2 Central & Eastern Europe 31.9 62.8 93.7 127.7 33.6 67.1 Mediterranean & Africa 86.8 174.5 259.6 348.0 91.8 184.6 North America 32.2 63.3 92.4 121.9 27.4 58.1 Latin America 21.1 42.5 59.7 75.7 16.2 33.8 Asia Pacific 23.4 51.3 75.1 96.9 21.3 46.0 Total Group 348.3 691.7 1,021.2 1,354.9 344.0 685.0 +1.5% +2.1% (1.8)% (1.5)% +7.8% +7.3% +1.7% (6.5)% V% ex. FX
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
H1-2018 Dec-2017 Dec-2016 Dec-2015
Advanced Emerging
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Total exposure up 2.2% vs. end of the year, in line with client activity increase
H1-2018 total exposure1 by debtors’ trade sector
1 Insured receivables : theoretical maximum exposure under the group’s insurance policies : €523.8bn as of 30/06/2018 vs. €512.6bn as of 31/12/2017
78% 79% 22% 21% 475 493
Evolution of total exposure1 by country of debtor
In €bn
H1-2018 total exposure1 – Top 10 countries vs. others
In %
79% 21% 513
13.8% 15.4% 11.4% 9.8% 9.7% 7.6% 8.1% 5.7% 3.4% 4.1% 2.6% 3.1% 2.6% 1.7% 1.0% Minerals, chemistry, oil, plastics, pharma and glass Agriculture, meat, agri-food and wine Construction Electrical equipment, electronics, IT and telecom Unspecialised trades Metals Car & bicycles, other vehicles and transportation Mechanical and measurement Textiles, leather and apparel Services to businesses and individuals Others Paper, packing and printing Public services Financial serivces Wood and furniture
H1-2018 total exposure1 by region
21.4% 20.6% 13.4% 20.3% 9.4% 6.0% 9.0% Western Europe Northern Europe Asia Pacific Mediterranean & Africa North America Latin America Central Europe 14.6% 11.5% 9.4% 8.0% 5.4% 4.9% 3.1% 2.7% 2.4% 2.1% 35.8%
Germany France Italy USA Spain UK Netherlands China Poland Japan Others
79% 21% 524
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
Loss ratio before reinsurance, including claims handling expenses – in %
Group
* % of Total revenue by region
North America Asia Pacific Latin America
8%* 7%* 5%*
Central Europe Western Europe Northern Europe Mediterranean & Africa
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27%* 22%* 21%* 8%* 57.8 54.2 43.0 50.3 39.7 45.0
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
60.7 54.3 15.9 63.5
26.6
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
128.5 61.5 38.7
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
54.5 47.5 39.0
31.1 79.4
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
52.1 51.4 53.3 42.1 52.3 52.2
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
41.0 51.1 44.4 80.2 42.3 26.7
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
58.0 59.2 55.4 56.3 54.8 53.5
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18
51.5 52.0 40.3 49.7 52.1 55.7
Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
►
Combined ratio before reinsurance
►
Combined ratio after reinsurance
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loss ratio before reinsurance
(B) (A)+ cost ratio before reinsurance (C) (A)
loss ratio after reinsurance
(E) (D)+ cost ratio after reinsurance (F) (D)
1
In €k
H1-2017 H1-2018 Earned Premiums Gross earned premiums [A] 565,582 560,705 Ceded premiums (150,072) (161,976) Net earned premiums [D] 415,510 398,729 Claims expenses Claims expenses [B] (316,781) (237,546) Ceded claims 54,874 60,831 Change in claims provisions 19,791 4,435 Net claims expenses [E] (242,116) (172,280) Technical expenses Operating expenses (333,735) (323,443) Employee profit sharing sharing and incentive plans 2,050 1,536 Other revenue 126,155 124,257 Operating expenses, net of revenues from other services before reinsurance [C] (205,530) (197,650) Commissions received from reinsurers 58,174 62,764 Operating expenses, net of revenues from other services after reinsurance [F] (147,356) (134,887) Ratios H1-2017 H1-2018 Loss ratio before reinsurance 56.0% 42.4% Loss ratio after reinsurance 58.3% 43.2% Cost ratio before reinsurance 36.3% 35.3% Cost ratio after reinsurance 35.5% 33.8% Combined ratio before reinsurance 92.3% 77.6% Combined ratio after reinsurance 93.7% 77.0%
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
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in M€ # of replies Consensus Q2-2018 Comment Total revenue
6
343 341 (2) Gross Earned Premiums
6
282 282 +0 Net Earned Premiums
6
202 200 (2) NEP/GEP
6
71.5% 70.9% (0.6) ppt Higher cession goes through the P&L Net underwriting income
6
40 36 (4) Normalising loss ratio Net Investment Income
6
10 5 (6) FX movements Current operating income
6
50 41
Hedging costs and normalising loss Other operating & Restructuring charges (Fit to Win)
6
(6) 1 +7 HQ lease offsetting Cofacrédit, low restr. charges Operating Income
6
45 42 (3) Lower investment income Net income
6
27 27 Lower tax rate Net Loss Ratio (%)
6
45.7% 46.6% +0.9 ppts Normalising risk environment Net Cost Ratio (%)
6
34.2% 35.0% +0.8 ppts Continued investments Net Combined Ratio (%)
6
79.9% 81.5% +1.6 ppts Getting closer to mid cycle target Spread Adverse FX impact GEP up +2.8% l-f-l on client activity
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
Calendar IR Contacts: investors@coface.com
Thomas JACQUET Head of Investor Relations & Rating Agencies thomas.jacquet@coface.com +33 (0)1 49 02 12 58 Ana-Cecilia URIBE ARCE DE BREANT Investor Relations Analyst anacecilia.uribearce@coface.com +33 (0)1 49 02 22 40
Coface is scheduled to attend the following investor conferences Next Event Date 9M-2018 Results
Next Event Date
BoA-ML CEO Conference, London Exane Mid Cap Conference, Paris September 25th, 2018 November 28th, 2018
31
Own shares transactions
TOTAL (in shares) % Total of # Shares Voting rights 30/06/2018 76,542 406,166 1,698,395 2,181,103 1.39% 155,067,129 Date Liquidity Agreement LTIP Buy-back
(cancellation)
Own shares transactions
H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018
IMPORTANT NOTICE: This presentation has been prepared exclusively for the purpose of the disclosure of Coface Group’s results for the period ending 30 June 2018. This presentation includes only summary information and does not purport to be comprehensive. The Coface Group takes no responsibility for the use of these materials by any person. The information contained in this presentation has not been subject to independent verification. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of the Coface Group, its affiliates or its advisors, nor any representatives of such persons, shall have any liability whatsoever for any loss arising from any use of this document or its contents or otherwise arising in connection with this document or any other information or material discussed. Participants should read the interim financial report for the first half, the financial statements for the period ending 30 June 2018 and complete this information with the Registration Document for the year 2017. The Registration Document for 2017 was registered by the Autorité des marchés financiers (“AMF”) on 5 April 2018 under the number D.18-0267. These documents all together present a detailed description of the Coface Group, its business, strategy, financial condition, results of operations and risk factors. This presentation contains certain forward-looking statements. Such forward looking statements in this presentation are for illustrative purposes only. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward- looking statements are based on Coface Group’s current beliefs, assumptions and expectations of its future performance, taking into account all information currently available. The Coface Group is under no obligation and does not undertake to provide updates of these forward-looking statements and information to reflect events that occur or circumstances that arise after the date of this document. Forward-looking information and statements are not guarantees of future performance and are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of the Coface Group. Actual results could differ materially from those expressed in, or implied or projected by, forward-looking information and statements. These risks and uncertainties include those discussed or identified under Chapter 5 “Main risk factors and their management within the Group” (Chapitre 5 “Principaux facteurs de risque et leur gestion au seins du Groupe”) in the Registration Document. This presentation contains certain information that has not been prepared in accordance with International Financial Reporting Standards (“IFRS”). This information has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under IFRS. More comprehensive information about the Coface Group may be obtained on its Internet website (http://www.coface.com/Investors). This document does not constitute an offer to sell, or a solicitation of an offer to buy COFACE SA securities in any jurisdiction.
32 H1-2018 RESULTS | PRESENTATION TO FINANCIAL ANALYSTS | 25 JULY 2018